3M 2015 Annual Report Download - page 87

TableofContents
isbasedonanassetallocationassumptionof25%globalequities,18%privateequities,41%fixed-incomesecurities,and16%
absolutereturninvestmentsindependentoftraditionalperformancebenchmarks,alongwithpositivereturnsfromactiveinvestment
management.Theactualnetrateofreturnonplanassetsin2015was0.7%.In2014theplanearnedarateofreturnof13.0%andin
2013earnedareturnof6.0%.Theaverageannualactualreturnontheplanassetsoverthepast10and25yearshasbeen7.8%and
10.0%,respectively.Returnonassetsassumptionsforinternationalpensionandotherpost-retirementbenefitplansarecalculatedon
aplan-by-planbasisusingplanassetallocationsandexpectedlong-termrateofreturnassumptions.
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During2015,theCompanycontributed$264milliontoitsU.S.andinternationalpensionplansand$3milliontoitspostretirement
plans.During2014,theCompanycontributed$210milliontoitsU.S.andinternationalpensionplansand$5milliontoits
postretirementplans.In2016,theCompanyexpectstocontributeanamountintherangeof$100millionto$200millionofcashto
itsU.S.andinternationalretirementplans.TheCompanydoesnothavearequiredminimumcashpensioncontributionobligationfor
itsU.S.plansin2016.Futurecontributionswilldependonmarketconditions,interestratesandotherfactors.
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FuturePensionandPostretirementBenefitPayments
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Thefollowingtableprovidestheestimatedpensionandpostretirementbenefitpaymentsthatarepayablefromtheplansto
participants.
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QualifiedandNon-qualified    
PensionBenefits Postretirement 
(Millions)  UnitedStates  International  Benefits 
2016BenefitPayments  $ 987  $ 205  $ 141 
2017BenefitPayments   997   215   156 
2018BenefitPayments   1,008   228   172 
2019BenefitPayments   1,017   241   153 
2020BenefitPayments   1,029   250   155 
Nextfiveyears   5,187   1,480   797 
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PlanAssetManagement
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3M’sinvestmentstrategyforitspensionandpostretirementplansistomanagethefundsonagoing-concernbasis.Theprimarygoal
ofthetrustfundsistomeettheobligationsasrequired.Thesecondarygoalistoearnthehighestrateofreturnpossible,without
jeopardizingitsprimarygoal,andwithoutsubjectingtheCompanytoanundueamountofcontributionrisk.Fundreturnsareusedto
helpfinancepresentandfutureobligationstotheextentpossiblewithinactuariallydeterminedfundinglimitsandtax-determined
assetlimits,thusreducingthepotentialneedforadditionalcontributionsfrom3M.Theinvestmentstrategyhasusedlongduration
cashbondsandderivativeinstrumentstooffsetasignificantportionoftheinterestratesensitivityofU.S.pensionliabilities.
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Normally,3Mdoesnotbuyorsellanyofitsownsecuritiesasadirectinvestmentforitspensionandotherpostretirementbenefit
funds.However,duetoexternalinvestmentmanagementofthefunds,theplansmayindirectlybuy,sellorhold3Msecurities.The
aggregateamountof3Msecuritiesarenotconsideredtobematerialrelativetotheaggregatefundpercentages.
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Thediscussionthatfollowsreferencesthefairvaluemeasurementsofcertainassetsintermsoflevels1,2and3.SeeNote13for
descriptionsoftheselevels.Whilethecompanybelievesthevaluationmethodsareappropriateandconsistentwithothermarket
participants,theuseofdifferentmethodologiesorassumptionstodeterminethefairvalueofcertainfinancialinstrumentscould
resultinadifferentestimateoffairvalueatthereportingdate.
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